Monthly Archives: March 2015

The back door taxing of your power and water, a Farbridge legacy

Posted March 6, 2015

When former Mayor Karen Farbridge lost her bid to sell off Guelph Hydro to a consortium of Hamilton and St. Catharine’s public utilities, it was time for Plan B.

Unfazed, the mayor convinced her council majority to call a $30 million note owed to the city by Guelph Hydro. The Mayor needed money and lots of it in 2009 because the city had concluded a $67 million cost-sharing stimulus deal with the Federal and Provincial governments. Guelph’s share was $22,250,000. When the dust settled the city’s real cost was $28 million due to a number of add ons not covered in the original tri-governmental agreement. Such items as $2 million for the Stone Road bicycle lanes, the $750,000 time clock in the Sleeman Centre and sundry other projects.

It was like Christmas around the new City Hall in 2009 that was completed following the September 2008 firing of the original general contractor, Urbacon Buildings Group Corp. Staff had moved into spanking new digs.

Unseen behind the scene was the multi-million dollar waste management plans to create a world-class waste management system. Or the $10 million south-end emergency services building to house police, fire and EMS equipment and personnel. The cops hated it. The fire and EMS staffs were often at loggerheads. In short, it was a failed experiment to unify public safety operations under one roof.

Instead, we are getting a $34 million renovation of the police headquarters downtown.

So there was money being spent everywhere in the city. The trouble was that the accounting of public money was suspect by many folks who analyzed the city’s financial reports. A respected financial analyst suggested that it appeared that the city was using two sets of books. The civic activists group, GrassRoots Guelph, exposed serious accounting errors and omissions in the official Financial Information Reports, sent annually to the provincial government.

Then along came Plan C. Why not tap into the cash flow of Guelph Hydro? Remember that Guelph Hydro collects fees from power customers as well as water users.

In 2011, shortly after the mayor’s re-election, the decision was made to form a separate corporation, controlled by the city, to manage city assets such as, Guelph Hydro. The mayor chaired the board of directors of Guelph Municipal Holdings Inc. (GMHI), supported by four council colleagues. plus two independents.

By quietly absorbing Guelph Hydro, with an understated book value of $66 million, the mayor was in a position to sell the utility. Her position was based on provincial government suggestions that smaller municipal transmission organizations should be amalgamated for efficiency

In 2012, Guelph Hydro paid a $3 million “dividend” to GMHI. $50,000 was retained by GMHI while the remaining $2,950,000 was transferred to the city treasury. In its annual report for 2013, GMHI received another $1.5 million as a dividend. The figures for 2014 have not been announced.

Ontario Municipal law forbids the taxation of vital public utilities including power and water by municipal governments.

It would appear that we are being taxed for power and water through a scheme to bend the rules using a separate corporate entity to mask taxing those utilities.

Before her defeat, the mayor outlined plans to expand GMHI and formed Envida Community Energy Corporation and a plan to spend $20 million to build a downtown thermal underground heating and cooling system.

Also plans are afoot to form a real estate corporation to buy and sell city assets.

The staff has proposed spending $246,000 in the 2015 budget to hire two senior asset management staffers.

While Mayor Guthrie replaced the former mayor, he is not the chair. Only he and Coun. Karl Wettstein serve on the GMHI board. The board members and staff are not elected.

While this may have been seen as a good idea five years ago, it remains an expensive and growing staff redundancy. It is probably illegal to convert so-called dividends into taxes of vital services. It remains to be revealed exactly what business and assets this off-balance sheet organization has accomplished in its four years of existence.

We do know that we have been nicked for an additional $4.5 million so far paying our power an water bills.

Talk about double dipping the taxpayers.

 

 

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Why the senior city staff morphed from a quintet into a troika

Posted March 2, 2015

It happened even before mayor-elect Cam Guthrie received the keys to his new office.

Just days after the October civic election, Chief Administrative Officer (CAO), Ann Pappert, announced a major reshuffle of the five senior executive directors running the city staff. Director Dr. Janet Laird, the overseer of such things as waste management, planning and engineering. resigned retiring to her new home in Whistler, BC one of the most expensive places to live in Canada.

The respected veteran manager Derek McCaughan, chief of operations and Transit, left his employment with no explanation from the city. A similar tactic was used when former CAO Larry Kotseff and CFO David Kennedy got the same treatment in 2007.

Why the glowing full-page tribute in the Mercury last year for resigning police Chief Bryan Larkin? He not only pushed through a $34 million police headquarters renovation, but also publicly endorsed former mayor Farbridge before leaving for his new job, August 31st. He returned recently to host the Karen Farbridge gala organized by her supporters. But not even the former chief could save the mayor from defeat. He came, he conquered and left.

The people ignored that endorsement like many others.

In reorganization, a troika of three directors assumed the departed director’s responsibilities. The survivors include CFO Al Horsman, Derrick Thomson, director of culture, recreation and social services and Mark Amorosi, corporate director of human resources, corporate finances and consigliore to former Mayor Farbridge’s administration.

All three were appointed Deputy CAO’s with commensurate compensation for increased responsibilities.

The question now is: Did Guthrie and members of the newly elected council know about this major change before the announcement? If they did know, why would they go along with it without knowing the reasons and the financial background?

It has the stench of a cover-up and perpetuation of the former mayor’s policies that ultimately led to her rejection by voters.

Here’s an example of this back shop strategy.

In the staff recommendations for the 2014 city’s operating budget, there is an item to spend $246,200 for two corporate asset management employees. It is believed these people will join GMHI (Guelph Municipal Holding Inc). Those to be recruited include a manager of corporate asset management and an asset management analyst. Friends, those two jobs are high paying, senior management positions.

But where do they fit in the current staff organization and/or outside corporations?

Well here’s a clue. There was a recent news release that laid out the new directors of GMHI). Remember, this was a separate organization set-up by the Farbridge administration in 2012. It is wholly owned by the city. Until October 2014, Mayor Farbridge was chairman of the board with a majority of councillors as directors plus two independent directors. CAO Ann Pappert was Chief Executive Officer.

Now three newcomers have been appointed to the board, two of whom do not live in Guelph. Mayor Guthrie and Coun. Karl Wettstein are the only elected officials now on the board.

The GMHI board oversees management of city assets including Guelph Hydro and Envida Community Energy Inc. There are more organizations including a real estate company to buy and sell city assets.

The announced change removes the majority of elected officials oversight of the GMHI operations. It is now in the hands of non-elected officials who are not directly responsible to the thousands of taxpayers and users of facilities that own those assets. Under no circumstances is this criticism of those non-elected board members who appear highly qualified.

But citizens should get nervous when the GMHI vision is: “To lead Ontario in powering community well-being and environmental stewardship with sustainability solutions.”

This is not the people’s vision. It’s pure unadulterated Farbridge’s ego-driven desire to be a “world class city and leader in sustainable energy.”

No, this $246,200 budget allocation to hire more senior asset management staff is a carefully orchestrated move by senior staff to perpetuate the Farbridge mission.

One might ask where does all this fit into the Mayor Guthrie’s agenda and dealing with the “Guelph Factor?”

By now we all recognize the failures of the former mayor’s administration, including the millions spent on waste management. Included are the $34 million spent on your overbuilt composting facility, $15.5 million waste collection system that ignores 13 per cent of the city population. And don’t forget the infamous Urbacon affair. Its genesis began in the 2007 Farbridge council ordering design changes to turn the new city hall into a hallmark of environmental sustainability.

Why then do we need another expensive layer of bureaucrats to “manage our assets?”

Council should end this charade of spending money to create a division that can easily be conducted by competent city staff. We already have talent on staff. Give them a chance.

The looming danger is the ability of GMHI to negotiate the sale of Guelph Hydro. The last time that was tried with the support of Mayor Farbridge, (before GMHI) council, including some Farbridge supporters, said, no way.

But that didn’t stop the former mayor. She called a $30 million note from Guelph Hydro that was owned by the city. After GMHI was formed, Guelph Hydro paid a $3 million “dividend” to GMHI in 2013 and another $1.5 million in 2014. That’s $4.5 million in just two years.

That money is coming from payment of your hydro bill.

The real reason GMHI was organized was to circumvent the provincial rules that essential services, such as water and power, cannot be used as another tax on citizens.

GMHI calls it a dividend. It’s nothing but another cash grab to pay for eight years of financial mismanagement driven by an agenda that the city could not afford.

Do we really want more of this?

 

 

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